Exchange for derivative products contingent on odds-based markets

ABSTRACT

A method and system are described for creating an exchange for futures products for odds markets based on binary outcomes. The futures product is based on the value of a particular fixed index or an exchange delivery settlement price in odds form, as recorded or computed at the end of a pre-assigned event or time-horizon. A particular use of this product would be on an exchange for sporting events, where for a given event, an identical interface to that which would currently be available for odds markets is made available, but which would be settled differently from the former, in such a manner as to allow investors to take positions on the movement of the odds without exposure to the final outcome of the event.

CROSS-REFERENCE TO RELATED APPLICATION

This application is a continuation of U.S. patent application Ser. No.12/110,068, filed Apr. 25, 2008, which claims priority to Irish PatentApplication No. S2007/0309, filed Apr. 26, 2007, and also to IrishPatent Application No. S2007/0498, filed Jul. 10, 2007, the contents ofeach of which are hereby incorporated by reference.

FIELD OF THE INVENTION

The present invention relates to an exchange for derivative productscontingent on odds-based markets and to methods of determining thesettlement price for such derivative products and of settling suchderivative products.

BACKGROUND

Trading shares involves bringing individuals with disposable capitaltogether with individuals who need an influx of capital to develop abusiness, and offer business shares in return for the disposablecapital. Trading futures, however, brings people together to transferthe price risk associated with the ownership of some commodity or aservice.

“Derivatives” is a term used to describe financial products, such asfutures and options contracts, which are derived from other existingproducts. For example, equity futures and options are derived fromequities in the underlying share market.

A futures contract is an agreement between a buyer and a seller to buyor sell a particular asset some time in the future at a price agreedtoday. Futures contracts may be cash-settled or require physicaldelivery of the underlying asset. For example, with equity futures, acash-settled contract requires a cash amount to be paid on thesettlement day, reflecting the difference between the initial futuresprice and the price of the underlying shares when the futures contractreaches maturity. In doing this, the investor can buy and sell contractswithout ever owning the shares in the first place.

Options give investors the right, but not the obligation, to buy or sella specific product or asset at a fixed price on or before a specificdate. Unlike futures contracts, the potential loss to the buyer of anoption is limited to the initial price (or premium) paid for thecontract, regardless of the performance of the underlying product, e.g.shares. Like futures, options can be used to try to capitalise on anupward or downward movement in the market, but also generate returns ina static market.

In a similar manner as an insurance contract allows the owner of anasset to protect it for a premium, futures and options contracts allowinvestors to protect their investments. For example, suppose a fundmanager knows they will have a certain amount of money to invest inshares at a fixed time in the future, but they believe the market isgoing to rise and there is a risk they will have to pay a lot more forthe shares. They can purchase options on the same shares for arelatively small outlay (called a premium), and use the profit from theoptions to offset the higher price they would have to pay for the shareswhen the money becomes available.

Online exchanges have recently become popular, wherein individuals mayprovide offers and/or take positions, typically on binary outcomeevents, such as sporting events or spreads of financial market indices.Many of the participants in these markets are interested in takingpositions to profit from beliefs of market behaviour, rather than fromthe outcome of the events on which these ‘spot’ markets are based.Whilst such individuals may alternately take long and short positions onodds markets to achieve this, the conducting of such trades is difficultfor even the most experienced of individuals. Thus, as in other types ofmarkets, derivatives markets have become more popular than the spotmarkets on which they are based.

SUMMARY

A novel futures product based on odds expectations is defined andexplained hereinafter for simplifying the conducting of trades on oddsmarkets, and a novel system for trading this product is likewisedisclosed.

According to an aspect of the present invention, a system for processingtrades contingent on odds-based markets is provided, which comprisesmeans for receiving odds S_(T) for at least one exogenous referencemarket, wherein odds S_(T) correspond to a specified reference outcometo be decided at a time later than a specified time T; means forreceiving, from trade parties, forecasts F_(t) and investment amountsa_(t) time t for the settlement of odds S_(T) for the exogenousreference market at the specified time T, wherein the trade partiescomprise at least one trade party for a positive investment amount a_(t)and at least one trade counter-party for a negative investment amounta_(t); means for registering at least one trade (F_(t), a_(t)) betweenthe trade parties prior to time T, the trade having a conditional valueequal to zero at any time prior to time T; and means for confirming, inresponse to the odds S_(T), the payoff to or the liability of the atleast one trade party as equal to a_(t)(F_(t)/S_(T)−1), andrespectively, the liability of or the payoff to the at least one tradecounter-party as equal to −a_(t)(F_(t)/S_(T)−1).

In a preferred embodiment, the system comprises means for settling thetrade value, further to the confirmation of the respective payoff andliability. The system desirably defines an exchange for the trades.

In a first embodiment, the system comprises at least one data processingterminal, wherein the means for receiving odds forecasts and investmentamounts, the means for registering at least one trade and the means forconfirming the respective payoff and liability respectively comprisedata processing terminal components suitably configured by dataprocessing terminal instructions.

In a second embodiment, the system comprises a plurality of dataprocessing terminals connected to a network and in communication withone another, wherein a first data processing terminal of the saidplurality receives odds forecasts from at least a second data processingterminal of the said plurality, the first data processing terminalreceives investment amounts from at least a third data processingterminal of the said plurality, the first data processing terminalregisters at least one trade between the at least second data processingterminal and the at least third data processing terminal of the saidplurality, and the first data processing terminal confirms therespective payoff and liability.

According to another aspect of the present invention, a method ofsettling trades contingent on odds-based markets is provided, whichcomprises the steps of receiving odds S_(T) for at least one exogenousreference market, wherein odds S_(T) correspond to a specified referenceoutcome to be decided at a time later than a specified time T;receiving, from trade parties, forecasts F_(t) and investment amountsa_(t) at time t, for the settlement of odds S_(T) for the exogenousreference market as of the specified time T, wherein the trade partiescomprise at least one trade party for a positive investment amount a_(t)and at least one trade counter-party for a negative investment amountsa_(t); registering at least one trade (F_(t), a_(t)) between the tradeparties prior to time T, the trade having a conditional value equal tozero at any time prior to time T; confirming, in response to the expiryodds S_(T), the payoff to or the liability of the at least one tradeparty as equal to a_(t)(F_(t)/S_(T)−1), and respectively the liabilityof or the payoff to the at least one trade counter-party as equal to−a_(t)(F_(t)/S_(T)−1); and settling the trade value.

According to a further aspect of the present invention, a method ofdetermining the settlement value S_(T) for trades contingent onodds-based markets is provided, which comprises the steps of receiving acomplete set of pairs (V_(t), S_(t)) representing executed trades in atleast one exogenous reference market, wherein odds S_(t) and volumeV_(t) correspond to a specified reference outcome to be decided at atime later than a specified time T; and determining the settlement valueS_(T) for trades (F_(t), a_(t)) comprising the median of the latestpercentage of volume by the volume V_(t) on the reference market priorto T, such that such that at least 50% of the latest percentage oftraded volume is greater than or equal to S_(T), and at least 50% of thelatest percentage of traded volume is less than or equal to S_(T).

In a first embodiment, the latest percentage of volume by traded amountsis comprised between 0.1% and 25%.

In a preferred embodiment, the latest percentage of volume by tradedamounts is comprised between 9% and 11%.

According to yet another aspect of the present invention, a method ofdetermining the settlement price S_(T) for trades contingent onodds-based markets is provided, which comprises the steps of receiving acomplete set of pairs (V_(t), S_(t)) representing executed trades in atleast one exogenous reference market, wherein odds S_(t) and volumeV_(t) correspond to a specified reference outcome to be decided at atime later than a specified time T; and determining the settlement valueS_(T) for trades (F_(t), a_(t)) comprising a trimmed mean of the latestpercentage of volume by the volume V_(t) on the reference market priorto T.

In a preferred embodiment, the trimmed mean is an average with avariable percentage, wherein extreme values on both positive andnegative sides have been removed.

BRIEF DESCRIPTION OF THE DRAWINGS

An exemplary embodiment of the present invention is described hereinwith reference to the drawings, in which:

FIG. 1 illustrates a system in which a preferred embodiment of thepresent invention may be embodied, including a plurality of networkeddata processing terminals;

FIG. 2 further details the hardware components of a first dataprocessing terminal shown in the system of FIG. 1, including processingmeans and memory means;

FIG. 3 details the processing steps according to which the first dataprocessing terminal of FIGS. 1 and 2 operates according to a firstembodiment the present invention;

FIG. 4 details the processing steps according to which the first dataprocessing terminal of FIGS. 1 and 2 operates according to a secondembodiment the present invention;

FIG. 5 illustrates the contents of the memory means shown in FIG. 2 atruntime, including several data structures.

FIG. 6 provides a representation of a first embodiment of a graphicaluser interface displayed at any of the plurality of networked dataprocessing terminals; and

FIG. 7 provides a representation of a second embodiment of a graphicaluser interface displayed at any of the plurality of networked dataprocessing terminals.

DETAILED DESCRIPTION

The invention is generally described herein by way of example, withreference to a preferred embodiment, and several alternativeembodiments. It should be understood, however, that the invention canextend to apply in other arrangements as well.

A preferred embodiment of the present invention is shown as a system inFIG. 1, which depicts a networked computerized trading system includinga plurality of data processing terminals. Amongst the plurality of dataprocessing terminals, a first data processing terminal 101 is configuredaccording to the present invention, and is connected with further dataprocessing terminals over a variety of wired and wireless networks.

In the example, terminal 101 is connected via a network with a seconddata processing terminal 102, which maintains at least one odds-basedexogenous reference market. In the example, second terminal 102 is anetworked betting exchange server, for instance such as the Betfairexchange administered by The Sporting Exchange company of London, UnitedKingdom, although it will be readily apparent to those skilled in theart that the second terminal may maintain any other type of exogenousreference market based upon binary outcomes, or that terminal 101 mayitself maintain the at least one odds-based exogenous reference marketand obtain a data feed from terminal 102 for this purpose, for instanceas described in further details hereinafter. In the embodiment shown,terminal 101 is connected to a Wide Area Network (WAN) 103, of which theInternet is an example, via an Internet Service Provider (ISP) 104, andterminal 102 is likewise connected to the WAN 103 via another ISP or thesame ISP 104.

Terminal 101 is also connected via a network with at least a third dataprocessing terminal 105, at which a user generates at least one forecastand provides an indication of an investment amount corresponding to theforecast, from which terminal 101 generates a futures product accordingto the present invention. In the example, third terminal 105 is anetworked personal computing device such as a desktop or laptopcomputer, and it will be readily apparent to those skilled in the artthat the third terminal may be any type of personal data processingdevice capable of interfacing a network, receiving user input andforwarding same over the network. In the embodiment shown, terminal 105is connected to the Wide Area Network (WAN) 103 via another ISP or thesame ISP 104 as terminals 101 and 102.

Terminal 101 is also connected via a network with at least a fourth dataprocessing terminal 106, at which a user at least provides an indicationof purchase of the futures product generated by the terminal 101, basedon the forecast and investment amount received from the third terminal105. In the example, fourth terminal 106 is a networked mobile computingdevice such as a mobile telephone or a personal digital assistant, andagain it will be readily apparent to those skilled in the art that thefourth terminal may be any type of personal data processing devicecapable of interfacing a network, receiving user input and forwardingsame over the network. In the embodiment shown, terminal 106 isconnected to the Wide Area Network (WAN) 103 via a low-bandwidth networkconnection Global System for Mobile Communication (‘GSM’) wirelessnetwork, or a higher-bandwidth General Packet Radio Service (‘GPRS’)wireless network, or a yet higher-bandwidth ‘G3’ wireless network 107.Fourth terminal 106 receives data from terminal 101 and transmits databack to terminal 101 as a digital signal over wireless network 107,wherein said signal is relayed respectively to or from the terminals101, 106 by the geographically-closest communication link relay 108 of aplurality thereof, at least one of which is connected with a remotegateway 109 providing an interface with the WAN 103. Gateway 109 is forinstance a communication network switch and provides protocol conversionif required, for instance because terminal 106 transmits data toterminal 101 which is formatted according to a cellular transmissionprotocol and, inversely, terminal 101 transmits data to terminal 106which is formatted according to a WAN transmission protocol.

Thus, the potential exists for data exchange between any of terminals101, 102, 105 and 106 by way of the WAN 103 and/or wireless network 107,interfaced by ISPs 104 and/or gateway 109. It will, however, be readilyapparent to those skilled in the art that the above environment isprovided by way of example only, and that the present invention may beembodied in any network comprising devices connected thereto exchangingdata encoded as described herein.

An example of terminal 101 shown in FIG. 1 is provided in FIG. 2.Terminal 101 is a computer terminal configured with a data processingunit 201, data outputting means such as video display unit (VDU) 202,data inputting means such as a keyboard 203 and a pointing device(mouse) 204 and data inputting/outputting means such as WAN connection205, magnetic data-carrying medium reader/writer 206A and opticaldata-carrying medium reader/writer 207A. Reader/writer 206A preferablyreads data and instructions for the processor described herein frommagnetic media such as a floppy disk 206B and writes data processed bysaid processor thereto, and reader/writer 207A preferably reads data andinstructions for said processor from optical media such as DVD-R 207Band writes data processed by said processor thereto.

Within data processing unit 201, a central processing unit (CPU) 208,such as a Core 2 Duo™ processor manufactured by the Intel®. Corporation,provides task co-ordination and data processing functionality.Instructions and data for the CPU 208 are stored in main memory 209 anda hard disk storage unit 210 facilitates non-volatile storage of dataand sets of instructions for CPU 208. A modem 211 provides a first meansfor a wired connection to the ISP 104, for instance if the connection205 is effected by a low-bandwidth dial-up service provider. A networkinterface card (NIC) 212 provides a second means for a wired connectionto the ISP 104, for instance if the connection 205 is effected by ahigh-bandwidth cable modem (not shown). A universal serial bus (USB)input/output interface 213 facilitates connection to the keyboard andpointing device 203, 204 and may provide third means for a wiredconnection to the ISP 104, for instance if the connection 205 iseffected by a high-bandwidth digital subscriber line (DSL) modem (notshown). All of the above devices are connected to a data input/outputbus 214, to which said magnetic data-carrying medium reader/writer 206and optical data-carrying medium reader/writer 207 are also connected. Avideo graphics adapter 215 receives CPU instructions over said bus 214for outputting processed data to VDU 202.

In the preferred embodiment, data processing unit 201 is of the typegenerally known as a compatible Personal Computer (‘PC’), but mayequally be any device configured with data inputting, processing andoutputting means providing at least the functionality described above.

Processing steps are described in FIG. 3, according to which terminal101 operates a preferred embodiment of the present invention. Terminal101 is first switched on at step 301. At step 302, a set of instructionsis loaded which provides said terminal 101 with basic functionality,such as initialisation of data input and/or output devices, data filebrowsing, keyboard and/or mouse input data processing, video dataoutputting, network connectivity and network data processing. At step303, an application is loaded into memory 209, which is a set ofinstructions for configuring CPU 208 to process data according to rulesdescribed hereafter. A data structure is also loaded at step 303, whichstores futures trades as detailed hereinafter and a user account for anyuser who connects to terminal 101 for any of creating, buying andselling futures trades. Upon completing the above initialisation andloading of steps 301 to 303, terminal 101 is configured to receive andprocess network input data and to process and transmit network outputdata, whereby terminal 101 establishes the connection 205 to the systemshow in FIG. 1 at step 304.

In a preferred embodiment of the present invention, the exogenousreference market for a given event is produced as exogenous index oddsfor the given event at terminal 101 at step 305, by receiving a datafeed over the WAN 103 from server 102 of all the odds being offered asliquid open interest for the various possible outcomes in that event,and by adjusting the best odds on offer for each outcome to define newexogenous index odds, so that the sum of the inverse (gross) exogenousindex odds for all possible outcomes in the event is as close aspossible to 1 (100%). The adjustment to a 100% market may be carried outin the following manner.

Let W₁, W₂, . . . Wm be the best price gross odds freely available forthe various possibilities 1, 2, . . . m at a given point in time,wherein it shall be assumed that the sum of 1/W_(i) amounts to a numbergreater than 1, with no adjustment required if the sum is less than orequal to 1.

Let b_(i) be computed so that H(b_(i))=1/W_(i), wherein H is defined asthe following approximation to the cumulative standard normaldistribution:H(x)=1/(1+exp(−1.6*x−0.07*x^3))

Next, let d be computed so that the sum of H(b_(i)−d) for a given eventis 1. Then, for i=1, 2, . . . m, the exogenous index odds prices aregiven by:Y _(i)=1/H(b _(i) −d)

These exogenous index odds will be made available for public display,and the ultimate settlement prices for any futures markets based on theexogenous index odds shall be the levels of exogenous index prices as ofthe close of the futures market for that event. In an alternativeembodiment, exogenous market data is received from exchange server 102at step 305.

In the example, S_(T) denote an S-for-1 odds position for an outcome onan existing ‘spot’ market, such as the exogenous market maintained atterminal 101 or server 102, wherein the position yields a gross payoutof S units if the outcomes occurs and 0 units otherwise. S varies over apredetermined time bounded by an expiry T, for instance bounded bymarket close if the exogenous market is subject to specific activityperiods. The Expiry T is selected as a point in time which is expectedto be of interest to potential market participants. There may be marketswith several sets of Expiries for the same event, such as some arbitrarytime period before a scheduled event time, or an actual scheduled eventtime, or some arbitrary time period and/or length of the event. In thecase of a horse race for example, such a set of expiry would comprise 10minutes before a scheduled race time, the scheduled race time and after400 meters of racing. Just as in traditional financial markets, theremay be calendar index futures such as a set date.

At step 306, a first question is asked as to whether new forecast dataF_(t) has been received from at least a third terminal, such as terminal105, in respect of odds defined in the exogenous market data received atstep 305. F_(t) denote a ‘futures’ trade price (i.e. forecast) for the‘settlement’ value of S_(T) on the market at expiry T. If the questionis answered positively, then terminal 101 creates a new futures trade inthe data structure at step 307, which is for instance a database offutures trades, and registers the trade price a_(t) for the futurestrade in the database. A futures trade (i.e. contract) bought at time ton the basis of F_(t) for an investment of a_(t) when the market settlesat value S_(T) will result in either a payout of a_(t)(F_(t)/S_(T)−1) ifS_(T) is less than F_(t), or a liability of −a_(t)(1−F_(t)/S_(T)) ifS_(T) is more than F_(t), with no disbursements occurring if S_(T) andF_(t) are substantially equivalent. The futures trade may be thought ofas a delivery of an odds position on the market at an agreed price atthe time of settlement, bundled together with an offsetting oddsposition on the market at the price of settlement, leading to a neutralposition with regard to the actual event outcome.

Specifically, a position of (1-unit) on the event at odds F₀ on theactual exogenous market will result in a payout of either F_(t) (if theoutcome occurs) or 0. In order to offset this position with a positionat odds S_(T), a stake of F_(t)/S_(T) would need to be sold on theexogenous market. Thus, the net change in position would beF_(t)/S_(T)−1, and the net position on the exogenous market would benull: the position would be entirely neutral with respect to theoccurrence or non-occurrence of the outcome. According to the exampleabove, the maximum liability of one unit long in the futures trade is−1, and the maximum gain is F_(t)−1. At step 308, terminal 101 updatesthe exchange data which is sent to connected remote user terminals, suchas terminal 106, in the form of replies to database queries orperiodically, and which comprises any one, a selection, or all of thefutures trades (F_(t), a_(t)) stored in the database.

A second question is asked at step 309, as to whether an offer has beenreceived for a futures trade (F_(t), a_(t)) stored in the database. Anoffer is received from an individual submitting, via a network-connectedterminal configured with a suitable interface, such as terminal 105 or106, on the exchange maintained at terminal 101 whereat the individualhas deposited funds, futures price bids both long and short in respectof a futures trade (F_(t), a_(t)) and get matched with otherindividuals' bids on a first-come first-served basis when ‘bid’ and‘offer’ prices agree. Thus, if the question is answered positively, thenthe offer is temporarily stored at step 310 and a first attempt is madeto match the offer with the product. If the first attempt at matching isunsuccessful, the offer remains temporarily stored and subsequentmatching attempts are performed during each iteration of the processdelimited by step 305 to 313, until the Expiry, at which time offerscannot be matched anymore. Unmatched offers at expiry are removed fromstorage. Alternatively, the offer is matched and, at the next update ofthe exchange data at the next iteration of step 308, is removed fromtemporary storage and included in the exchange data.

Alternatively, the question of step 309 is answered negatively and athird question is asked at step 311, as to whether an expiry T has beenreached in respect of anyone futures trade (F_(t), a_(t)) stored in thedatabase. If the question is answered positively, then the settlementvalue of the futures trade is processed at step 312, in accordance withthe parameters described hereinabove. In an advantageous alternativeembodiment of the present invention, the application incorporatesmovement limits, whereby a percentage α (representing an extremepercentage move) may be set, so that for any given trade at price F_(t),the price at which the trade is settled is limited to lie betweena_(t)(F_(t)/(1+α)) and a_(t)(F_(t)/(1−α)), so that the change in theposition is between F_(t)/(F_(t)/(1−α))−1=−α andF_(t)/(F_(t)/(1+α))−1=α, wherein α is a value typically less than orequal to 50%. As a result of processing the settlement value, therespective user accounts of the users who have bought the futures trade(F_(t), a_(t)) at expiry are credited or debited in accordance withwhether the settlement value respectively represents a payoff or aliability.

Alternatively, the question of step 311 is answered negatively, and afourth question is asked at step 313, as to whether the user of terminal101 may then decide to terminate the processing of the application firstloaded at step 303. If the question is answered negatively, controlreturns to step 305 for the purpose of receiving updated exogenousmarket data, and thereafter process further futures trades. Theuninterrupted combined cycle of steps 305 to 312 in effect results in afutures exchange for odds-based exogenous markets. However, if thequestion is answered positively, then the instructions and the databasefirst loaded at step 303 are unloaded from memory 209 at step 314, andthe terminal may eventually be switched off at step 315.

Processing steps are described in FIG. 4, according to which terminal101 operates an alternative embodiment of the present invention.Terminal 101 is again first switched on at step 301. At step 302, theset of instructions is loaded which provides said terminal 101 withbasic functionality, such as initialisation of data input and/or outputdevices, data file browsing, keyboard and/or mouse input dataprocessing, video data outputting, network connectivity and network dataprocessing. At step 303, an application is loaded into memory 209, whichis a set of instructions for configuring CPU 208 to process dataaccording to rules described hereafter. A data structure, such as adatabase, is also loaded at step 303, which stores futures trades asdetailed hereinafter and a user account for any user who connects toterminal 101 for any of creating, buying and selling futures trades.Upon completing the above initialisation and loading of steps 301 to303, terminal 101 is optimally configured to receive and process networkinput data and to process and transmit network output data, wherebyterminal 101 establishes the connection 205 to the system show in FIG. 1at step 304.

At step 305, exogenous market data such as odds S_(T) and correspondingperiod expiry data T is again received by terminal 101. At step 306, afirst question is asked as to whether new forecast data F_(t) has beenreceived from at least a third terminal, such as terminal 105, inrespect of odds defined in the exogenous market data received at step305. If the question is answered positively, then terminal 101 creates anew futures trade in the database of futures trades at step 307, andregisters the trade price a_(t) for the futures trade in the database.At step 308, terminal 101 updates the exchange data which is sent toconnected remote user terminals, such as terminal 106, in the form ofreplies to database queries or periodically, and which comprises anyone, a selection, or all of the futures trades (F_(t), a_(t)) stored inthe database.

In any futures market, precautions must be taken to avoid manipulationof futures settlements via manipulation of the index or exogenous marketon which the futures trades are based. The most common method ofachieving this is to define a robust Exchange Delivery Settlement Price(EDSP), which is typically a trimmed average of index prices towards theexpiry of the trades. It is important that this formula be relativelysimple, publicly available, and impervious to manipulation. While thereare several common classes of formulae which might be used to achievethis, analysis of market data and simulated stress tests have suggestedthe median of the last quarter by volume of turnover before expiry. Inthe preferred embodiment, the median is the value S_(T) such that:

${\sum\limits_{{i\text{:}\mspace{14mu} S_{i}} \geq S_{T}}\; V_{i}} \geq {\frac{1}{2}{\sum\limits_{{All}\mspace{14mu} i}\; V_{i}}}$and${\sum\limits_{{i\text{:}\mspace{14mu} S_{i}} \leq S_{T}}\; V_{i}} \geq {\frac{1}{2}{\sum\limits_{{All}\mspace{14mu} i}\; V_{i}}}$

i.e. at least 50% of volume is at least as high as (i.e. greater than orequal to) S_(T), and at least 50% of volume is at least as low as (i.e.less than or equal to) S_(T). In an alternative embodiment, the medianis replaced by a trimmed mean, i.e. an average with a certain percentageof extreme values on both positive and negative sides removed.

In this embodiment, the settlement value S_(T) of a trade is processedas follows. A question is asked at step 401, as to whether apredetermined reference period of trading has started for thecomputation of a volume-weighted median of trades (S_(i), V_(i)),wherein indicia i=1, 2, . . . , n and the contracts consist of amountsV_(i) at odds S_(i) occurring in the final reference period of trading.If the question of step 401 is answered negatively, control proceeds tothe question of step 313, described above and again further below forreference. Alternatively, the question of step 401 is answeredpositively, and conditions are declared for the computation at step 402:it is preferable that the odds S_(i) be ordered, such that S₁<S₂< . . .<S_(n). and V_(total) denotes the total volume of trades during thereference period: V_(total)=V₁+V₂+ . . . +V_(n). At step 403, V_(total)is processed as the total of the trades performed since the beginning ofthe reference period. For example, only one trade has been processedsince the beginning of the period, then V_(total)=V₁. Likewise, if twotrades have been processed since the beginning of the period, thenV_(total)=V₁+V₂, and so on and so forth.

A question is next asked at step 404, as to whether the processed valueof V_(total) as of the past iteration of step 403 is less than half ofV_(total). If the question of step 404 is answered positively, a nextquestion is asked at step 405, as to whether the predetermined referenceperiod of trading has ended. If the question of step 405 is answerednegatively, control proceeds to the question of step 313, describedabove and again further below for reference. Alternatively, if eitherthe question of step 404 is answered negatively (signifying that theprocessed value of V_(total) as of the past iteration of step 403 ismore than half of V_(total)), or the question of step 405 is answeredpositively (signifying that the predetermined reference period oftrading has ended), then a next question is asked at step 406, as towhether the processed value of V_(total) as of the past iteration ofstep 403 is equal to half of V_(total).

If the question of step 406 is answered positively, then the settlementvalue of the trade S_(T) is defined as S_(k) at step 407 and controlthen proceeds to the question of step 313. Alternatively, the processedvalue of V_(total) as of the past iteration of step 403 must amount tomore than half of V_(total), and in this case the settlement value ofthe trade S_(T) is defined as [(S_(k)−1+S_(k))/2] at step 408, andcontrol then proceeds to the question of step 313.

The application loaded at step 303 in effect determines the settlementvalue S_(T) for trades (F_(t), a_(t)) by calculating the median of thelatest percentage of volume by traded amounts V_(t) on the referencemarket prior to T, such that at least 50% of the latest percentage ofvolume is greater than or equal to S_(T), and at least 50% of the latestpercentage of volume is less than or equal to S_(T): the applicationbounds the settlement value of the futures trade at expiry at step 402such that at least 50% of the latest percentage of volume is greaterthan or equal to S_(T), and the application bounds the settlement valueof the futures trade at expiry at step 403 such that at least 50% of thelatest percentage of volume is lesser than or equal to S_(T). As aresult of processing the settlement value S_(T), the respective useraccounts of the users who have bought the futures trade (F_(t), a_(t))at expiry are credited or debited in accordance with whether thesettlement value respectively represents a payoff or a liability.

The question is asked at step 313, as to whether the user of terminal101 may then decide to terminate the processing of the application firstloaded at step 303. If the question is answered negatively, controlreturns to step 305 for the purpose of receiving updated exogenousmarket data, and thereafter process further futures trades. Theuninterrupted combined cycle of steps 305 to 312, incorporating valuesettlement calculation of steps 401 to 408, in effect results in atamper-proof futures exchange for odds-based exogenous markets. However,if the question is answered positively, then the instructions and thedatabase first loaded at step 303 are unloaded from memory 209 at step314, and the terminal may eventually be switched off at step 315.

Some exogenous markets are known to be subjected to external eventsbeyond the control of the market administering system. For example, in abetting market for equestrian races, individual horses are frequentlyretired from a race moments before the start of the race due tounforeseen circumstances. Such external influences require correspondingadjustments of the prices on the exogenous market, and in an alternativeembodiment of the present invention, the futures market may eithersuspend trading and nullify all trades, or adjust all settlement pricesin a manner reflecting the adjustment in the exogenous market, as acontingency. For example, if an external event occurs and the exogenousmarket is corrected by fixed percentage decrease of 25% of all (gross)odds, then a futures trade entered into in respect of odds afflicted bythe correction will be similarly reduced by 25%, in ‘parallel’ with theexogenous market.

The contents of the memory 209 of terminal 101 at any given time duringthe processing of data with the application according to the invention,such as shown in FIGS. 3 and 4 by way of example, are further detailedin FIG. 5.

An operating system is first shown at 501, which corresponds to the setof instructions loaded at step 302 for providing terminal 101 with basicfunctionality, such as initialisation of data input and/or outputdevices, data file browsing, keyboard and/or mouse input dataprocessing, video data outputting, network connectivity and network dataprocessing. An application is shown next at 502, which corresponds tothe set of instructions loaded at step for configuring CPU 208 toprocess data as detailed above.

A database is shown next at 504, which corresponds to the data structurealso loaded at step 303 for storing futures trades as detailed above.The database preferably stores futures trade data 504 comprising atleast the respective data defining each trade (F_(t), a_(t)). Thedatabase also preferably stores settlement data 505 comprising at leasta respective unique identifier for each party to any trade 504, the saideach parties comprising at least one trade party, in the example theuser of terminal 106, and one trade counter-party, in the example theuser of terminal 105. The database preferably further stores unique useraccount or registration data 506, or unique terminal account orregistration data 506, for at least uniquely identifying each tradeparty or counterparty in the system and validating access to the saidsystem.

Query replies are shown at 507, which are data packets processed byapplication 502 for communication to any connected terminal in thesystem to which it is connected, such as market data supplying terminal102, forecasting and trade offering terminal 105 and trade contractingterminal 106, as a reply to a respective query from the said anyterminal. Typically, such query replies comprises trade data (F_(t),a_(t)) 504, and/or settlement data 505, and/or trade parties data 506.

Exogenous market data is shown at 508 as data received from terminal 102before its inclusion in data structure 503 under the form of in trades504. Exogenous market data 508 may be stored at terminal 101 for datacorrelation and/or verification purposes independently of the trades 504since, in the system of FIG. 1, the user at any third-party terminal105, 106 may access exogenous market data 508 independently of terminal101 and directly from terminal 102. Forecast data F_(t) and investmentamount indication data at received from the at least third dataprocessing terminal 105 are respectively shown at 509 and 510, fromwhich the application 502 generates and stores the trades data 504.Purchase decision data 511 received from the at least fourth dataprocessing terminal 106 is shown at 511, the simplest embodiment ofwhich is a relevant portion of the unique terminal account orregistration data 506 of the user of terminal 106, or of terminal 106.Memory portion 512 stores the offers received at step 309 andtemporarily stored at step 310, before their matching and until theexpiry of the market event to which they respectively relate.

This system is ideally suited to an online exchange, whereby individualssubmit, via a suitable interface, on an exchange where they havedeposited funds, futures price bids both long and short and get matchedwith other individuals' bids on a first-come first-served basis when‘bid’ and ‘offer’ prices agree. Prices on a futures market may beinterpreted as market expectations of final odds on a spot market, in amanner which is intuitively clear to experienced and relativelyinexperienced market participants alike. Each time an individual entersinto a position, a ‘hold’ is placed on a portion of their funds to theextent of their maximum liability, as determined by their position. Inthe alternative embodiment illustrated in FIG. 4, the extent of theirmaximum liability is as determined by their position and by the limit onprice movements.

In an alternative embodiment, movement limits may be imposed on theSettlement Price, in accordance with practice on many traditionalFutures Exchanges internationally. This option permits leveragedpositions, as the maximum loss for a given contract may be significantlyreduced. This embodiment may be carried out by the followingmodification of the settlement formula. For a futures price F and afinal settlement price S, for a 1 unit contract, the followingpre-commission settlement amounts apply:

-   -   to the Buyer (without limits): (F/S−1)    -   to the Seller (without limits): (1−F/S)

and the corresponding amounts would be:

-   -   to the Buyer (with limits): max(min(F/S−1,K−1),1/K−1)    -   to the Seller (with limits): min(max(1−F/S,−K+1),−1/K+1)

Note that the function min(x,y) equals the lesser of x and y, and thefunction max(x,y) equals the greater of x and y. Typical values of Kwould be 1.50, 2.0, 3.0 and so on and so forth. By way of example, forF=20, S=10 and K=1.5,

-   -   to the Buyer (without limits): (F/S−1)=(20/10−1)=1    -   to the Seller (without limits): (1−F/S)=−1    -   to the Buyer (with limits):        max(min(F/S−1,K−1),1/K−1)=max(min(1,0.5),−0.33)=0.5    -   to the Seller (with limits):        max(−F/S,−K)=min(max(−1,−0.5),0.33)=−0.5

However, for F=20 and K=1.5 still, the limits would have no effect if Sis greater than 13.33. The maximum potential loss per unit of contractfor the seller is reduced from F−1 to K−1. Thus a seller for F=20 whenK=1.5 would have exposure reduced from 19 per unit of contract to 0.5per unit of value of the contract.

On the other hand, by way of another example, suppose F=2.0, S=50 andK=1.5,

-   -   to the Buyer (without limits): (F/S−1)=(2/50−1)=−0.96    -   to the Seller (without limits): (1−F/S)=0.96    -   to the Buyer (with limits):        max(min(F/S−1,K−1),1/K−1)=max(min(−0.96,0.5),−0.33)=−0.33    -   to the Seller (with limits):        max(−F/S,−K)=min(max(−0.96,−0.5),0.33)=0.33

The maximum possible loss for the buyer is reduced from 1 unit to 1−1/Kunits. Thus a buyer for F=2.0 when K=1.5 would have exposure reducedfrom 1 unit to 0.33 units per unit of value of the contract.

In yet another alternative embodiment, options markets of call and puttype may be mirrored. In this embodiment, the Exchange may be set up ina manner comparable to the earlier embodiments, but the settlementformulae are modified: a quantity P (the “premium”) is defined for theexchange, and for a Buy-Sell agreed price F the payoff structure forsettlement price S is given by the following modification of thesettlement formula.

For a ‘Call’-Type Exchange:

-   -   Buyer receives: max(F/S−1,0)−P    -   Seller Receives: min(1−F/S,0)+P

For a ‘Put’-Type Exchange:

-   -   Buyer receives: max(1−F/S,0)−P    -   Seller Receives: min(F/S−1,0)+P

By way of example, suppose a ‘Call’-type market with P=0.10, suppose thebuyer and the seller agree on a contract price of F=10.0 and theresulting settlement price is S=8.0. In this embodiment, the payoffs aretherefore as follows,

-   -   to the Buyer: max(10/8−1,0)−0.1=0.15    -   to the Seller: min(1−10/8,0)+0.1=−0.15

Had S been 11 instead of 8, then the payoffs above would have beeninstead,

-   -   to the Buyer: max(10/11−1,0)−0.1=−0.1    -   to the Seller: min(1−10/11,0)+0.1=0.1

In the above alternative embodiments, the operation of the Exchange isidentical to that outlined in relation to the basic Futures Exchangeaccording to the present invention.

A preferred embodiment of the interface discussed above is illustratedin FIG. 6, for instance on the display of terminal 105 or 106. Theinterface 601 is shown displayed on VDU 202 and preferably comprises anumber of user-operable sections, each having a respectivefunctionality. The user operability may be implemented in a conventionalmanner, using either or both of keyboard 203 and mouse 204 foralphanumerical data input and for displacing an interface cursor 602over a section and effecting a selection. Such a configuration isreferred to as a ‘point and click’ interface, and is particularly usefulfor use with personal computers. It will be readily understood by thoseskilled in the art, however, that the characteristics and functionality,shortly to be described, of such an interface may be adapted for optimaluse to the respective data input and display capacities of a vast numberof very disparate data processing terminals, such as the example mobiletelephone handset 106.

A first section 603 is a shortcut button to the user or terminal data506 and any of the financial data 504, 505 respectively associated withthat user or terminal data 506 stored in the database 503 of terminal101. Button 603, when selected by translating pointer 602 over thesection and providing a selection input, such as a mouse click or akeyboard stroke, results in a user- or terminal-specific data querybeing sent to terminal 101 over the network, and which will be repliedto by terminal 101 with one or more query replies 507, specificallyaddressed to the requesting terminal using unique identification data506. Button 603 may be used for a user to manage any number ofpreferences and/or configuration parameters defining his trading accountas maintained by terminal 101.

A next section 604 is a shortcut button to the trading data 504respectively associated with the user 506 logged at the terminal, orassociated with the terminal 506. Again, button 604, when selected bytranslating pointer 602 over the section and providing a selectioninput, such as a mouse click or a keyboard stroke, results in a user- orterminal-specific data query being sent to terminal 101 over thenetwork, and which will be replied to by terminal 101 with one or morequery replies 507, specifically addressed to the requesting terminalusing unique identification data 506. Button 604 may be used for a userto manage all of the trades 504 to which the user is a party or acounterparty.

A next section 605 provides a representation of the futures market andis preferably embodied as a user-configurable grid. The representation605 of the market is preferably updated in real-time, with event data606 obtained from exogenous market data 508 displayed in respect of eachcorresponding trade 607 (504, 509) offered for matching 608, 609 (510)by a trade counter-party 506. The corresponding matching data 608, 609is preferably, although not necessarily, configured for allowing usersto take (511) a short 608 or a long 609 position corresponding to theinvestment data 510. The representation 605 of the market is alsopreferably updated in real-time, with event expiry data 610 likewiseobtained from exogenous market data 508 displayed in respect of eachcorresponding trade 607 (504, 509), and a preferred embodiment of therepresentation of expiry data may take the form of a running countdownto the expiry of the trading time allowed for the respective event 607.

The user-configurable functionality of the interface 601, particularlyof representation 605 therein, may be implemented by permitting a userto index trades 607 (504, 509) on offer by type of exogenous market data508 (e.g. event data 606), to selectively display only short positionmatching data 608 or long position matching data 609, to order trades607 (504, 509) chronologically based on event expiry data 610 and itwill be readily understood by those skilled in the art that any numberof further configurations, particularly advantageous forms of which mayallow for any single, combination, or all of the above, may beimplemented, without departing from the scope of the present invention.

A next section 611 is a shortcut button to communicate a selection ofmatching data 608, 609 by the user or terminal 506 to terminal 101.Further to the selection of a trade 607 and/or of matching data 608 or609 with cursor 602 by translating pointer 602 over representation 605and providing a selection input, such as a mouse click or a keyboardstroke, the selection of button 611 results in the communication of theselection of the trade 607 and/or matching data 608 or 609 to terminal101, at which it will be received as trading input data 511 for updatingthe database 503. The communication is uniquely associated with thecommunicating trade party or counterparty using unique identificationdata 506 associated with the terminal.

In the preferred embodiment, if a user 506 selects button 604, therepresentation 605 changes upon receipt of the data query reply 507 atthe terminal, from the live market data to the trades 504 uniquelyassociated with the requesting user 506. The representation may besubstantially the same as the example shown and described above, to theexception that trades 607 displayed now only comprise those to which theuser is a party or counterparty. A next section 612 is a shortcut buttonto communicate a divestment of a trade 607 by the user or terminal 506to terminal 101. Further to the selection of a trade 607 and/or ofmatching data 608 or 609 to which the user is a party or counterparty,with cursor 602 by translating pointer 602 over representation 605 andproviding a selection input, such as a mouse click or a keyboard stroke,the selection of button 612 results in the communication of an offer tosell the trade 607 to terminal 101, at which it will be again receivedas trading input data 511 for updating the database 503, but with anegative investment amount 608, 609 to be offset by an eventual buyer.

A next section 613 is a shortcut button to submit a new proposal for atrade 607 to terminal 101. Button 613, when selected by translatingpointer 602 over the section and providing a selection input, such as amouse click or a keyboard stroke, results in the communication of aselection of event data 508 and respective forecast data 509 andinvestment data 510 to terminal 101, at which it will be received andeventually processed as a new trade 504 uniquely associated with thecommunicating trade party or counterparty, using unique identificationdata 506 associated with the terminal or user from which the proposalwas received. Adverting to the description above, the new trade data 504appears as a trade 607 including event particulars 606, 610 and matchingdata 608, 609 in the live futures market representation 605 once theapplication 502 updates the database 503 with the proposal data.

An alternative embodiment of the interface discussed above isillustrated in FIG. 7, for instance on the display of terminal 105 or106. The interface 701 is shown displayed on VDU 202 and again comprisesa number of user-operable sections, each having a respectivefunctionality. The user operability may again be implemented in aconventional manner, using either or both of keyboard 203 and mouse 204for alphanumerical data input and for displacing the interface cursor602 over a section and effecting a selection.

The sections 603, 604, 612 and 613 are featured in interface 701 withsubstantially the same respective purpose and functions as previouslydescribed herein.

A next section 702 provides a representation of a futures marketcontaining a plurality of events and is preferably again embodied as auser-configurable grid. The representation 702 of the market ispreferably updated in real-time, with event data 703 obtained fromexogenous market data 508 displayed in respect of each correspondingtrade 704 (504, 509) offered for matching 705, 706 (510) by a tradecounter-party 506. The corresponding matching data 705, 706 ispreferably, although not necessarily, configured for allowing users totake (511) a short 705 or a long 706 position corresponding to theinvestment data 510. The representation 702 of the market is alsopreferably updated in real-time, with event expiry data 610 likewiseobtained from exogenous market data 508 displayed in respect of eachcorresponding trade 704 (504, 509), and a preferred embodiment of therepresentation of expiry data may take the form of a running countdownto the expiry of the trading time allowed for the respective event 703.In a particularly advantageous implementation of this embodiment, therepresentation 702 includes tabulations 708 for selecting the respectiveuser-configurable grid of any particular event of the plurality thereof,therefore the respective event data 703, trades 704 and matching data705, 706 for same.

The user-configurable functionality of the interface 701, particularlyof representation 702 therein, may be implemented by permitting a userto index trades 704 on offer by type of exogenous market data 508 (e.g.event data 703), to selectively display only short position matchingdata 705 or long position matching data 706, to order trades 704 (504,509) chronologically based on event expiry data 610 and it will bereadily understood by those skilled in the art that any number offurther configurations, particularly advantageous forms of which mayallow for any single, combination, or all of the above, may beimplemented, without departing from the scope of the present invention.

In this embodiment, the respective representation of each matching data705, 706 is configured as a shortcut button 707 to communicate aselection of matching data 705, 706 by the user or terminal 506 toterminal 101. Further to the selection of a trade 704 and/or of matchingdata 705 or 706 with cursor 602 by translating pointer 602 overrepresentation 702 and providing a selection input, such as a mouseclick or a keyboard stroke, the selection of any button 707 results inthe communication of the selection of the trade 702 and/or matching data705 or 706 to terminal 101, at which it will be received as tradinginput data 511 for updating the database 503. The communication isuniquely associated with the communicating trade party or counterpartyusing unique identification data 506 associated with the terminal.

Since the system is preferably intended for use with many remoteterminals such as terminals 105 and 106, the interface 601 is preferablyimplemented as a file containing at least both instructions encoded inHyper-Text Mark-up Language (HTML) and the data from terminal 101described above and which, when received by each remote terminal in theenvironment of FIG. 1, may be processed for display as auser-interactive Internet page. Many variations may be readily envisagedby those skilled in the art, making use of any or all of Cascaded StyleSheets (CSS), extended Mark-up Language (XML), functional appletsencoded in Javascript and the like, without departing from the scope ofthe present invention. Preferably still, because of the transactionalcharacter of the data exchanged between terminal 101 and remoteterminals 105, 106, the file and/or the communication path is securedagainst tampering and/or unauthorised access or use, with any suitablesecurity and/or encryption techniques, such as for instance securingeach respective connection between terminals 101 and 105, 106 withsecure HTTP (https), requesting terminal and/or user authentication atterminal 101 from any remote terminal 105, 106, and the like.

Exemplary embodiments of the present invention have been describedherein. Those skilled in the art will understand, however, that changesand modifications may be made to these embodiments without departingfrom the true scope and spirit of the invention, which is defined by theclaims.

What is claimed is:
 1. A computing device for processing trades onodds-based markets, the computing device comprising a memory, a displayunit, and a user input device, coupled to a processor, wherein thecomputing device communicates with a server system that maintains atleast one odds-based exogenous reference market, the computing devicebeing configured to: receive from the server system: exogenous indexodds, wherein the exogenous index odds comprise adjusted gross odds forone or more possible outcomes in a given sporting event offered by anonline exogenous odds market, the sum of the inverse of the adjustedgross odds for all possible outcomes being about 1, wherein the odds forthe one or more possible outcomes vary over a predetermined time boundedby an expiry that is prior to the respective outcome; short positionmatching data, the short position matching data representing one or moreshort positions offered for matching with respect to the one or morepossible outcomes during the predetermined time, where the one or moreshort positions vary over the predetermined time; long position matchingdata, the long position matching data representing one or more longpositions offered for matching with respect to the one or more possibleoutcomes during the predetermined time, where the one or more longpositions vary over the predetermined time; dynamically display in agraphical user interface on the display unit during the predeterminedtime a grid comprising a plurality of locations for receiving usercommands via the graphical user interface, the plurality of locationscomprising: a short position section, the short position sectioncomprising one or more locations that dynamically display informationregarding at least one of the one or more short positions, as the one ormore short positions vary over the predetermined time; and a longposition section, the long position section comprising one or morelocations that dynamically display information regarding at least one ofthe one or more long positions, as the one or more long positions varyover the predetermined time; obtain a selection of a particular locationof the grid, the selection being obtained via a single action of theuser input device at a particular time prior to the expiry; and inresponse to another single action of the user input device, in aparticular location of the graphical user interface, communicate theselection to the server system to be processed at the server system as anew trade that comprises the long or short position displayed in theparticular location of the grid at the particular time, wherein asettlement value of the new trade is determined prior to the outcome ofthe sporting event.
 2. The device of claim 1, wherein the computingdevice is further configured to dynamically display the exogenous indexodds, the exogenous index odds being displayed as one or morepercentages representing the one or more possible outcomes in the givenevent.
 3. The device of claim 1, wherein the computing device is furtherconfigured to dynamically display the exogenous index odds to representprobabilities of the one or more possible outcomes, wherein the sum ofthe probabilities for all possible outcomes is 100%.
 4. The device ofclaim 1, wherein the computer device is a mobile telephone handset. 5.The device of claim 1, wherein the computing device is furtherconfigured to dynamically display the exogenous index odds for the oneor more possible outcomes as one or more percentages and receive aselection from the user representing a choice of a short or longposition.
 6. The device of claim 1, wherein processing trades includesprocessing at least one of: a derivative product and a bet.
 7. Thedevice of claim 1, wherein: the information regarding at least one ofthe one or more short positions comprises at least the short oddsoffered for matching by a trade counter-party; and the informationregarding at least one of the one or more long positions comprises atleast the long odds offered for matching by a trade counter-party. 8.The device of claim 1, wherein the grid further comprises an eventsection, the event section comprising one or more locations that displayinformation regarding the respective outcome.
 9. The device of claim 1,wherein the grid further comprises an expiry section, the expiry sectioncomprising one or more locations that display information regarding theexpiry of the respective outcome.
 10. The device of claim 9, wherein theinformation regarding the expiry of the respective outcome comprises arunning countdown to the expiry of the trading time allowed for therespective outcome.
 11. The device of claim 1, wherein the computingdevice is further configured to: receive from the server systeminformation regarding one or more active trades previously processed bythe server as new trades, the information comprising at least thesettlement value; and display the information.
 12. The device of claim11, wherein the grid further comprises: a trades section, the tradessection comprising one or more locations that dynamically displayinformation regarding one or more active trades previously processed bythe server as new trades; and a divestment input; and the computingdevice is further configured to: obtain a selection from a usercomprising one or more of the active trades displayed in the tradessection of the grid, the selection being obtained via a single action ofthe user input device at a particular time prior to the expiry; and inresponse to another single action of the user input device selecting thedivestment input, communicating information regarding the selected oneor more active trades to the server to be registered by the server as anew offer to sell the selected one or more active trades.
 13. The deviceof claim 1, wherein the new trade further comprises an investmentamount.
 14. A system for processing options contracts on sporting eventodds markets, the system comprising: a server comprising at least oneserver processor coupled to a server memory containing instructionsoperable to cause the server to: adapt a graphical user interface torespective data input and display capacities of a plurality of disparatedata processing terminals; define a premium P; register an optionscontract between a buyer and a seller, the options contract comprising aforecast F of a value for odds S of an outcome of a sporting event thatwill be offered by an online exogenous odds market prior to the outcome,wherein the odds vary over a time T that expires prior to the outcome;determine S from the online exogenous market; calculate a buyer payoffbased on F and S with a debit for the premium; calculate a seller payoffbased on F and S with a credit for the premium; and adjust a buyeraccount by an amount of the buyer payoff and adjust a seller account byan amount of the seller payoff, wherein calculating the buyer payoff andcalculating the seller payoff are both completed prior to the outcome ofthe sporting event; and at least one data processing terminal incommunication with the server, the terminal comprising: a terminalmemory, a display unit, and a user input device, coupled to a terminalprocessor, the terminal memory containing instructions operable to causethe terminal to: receive from the server: the gaphical user interface;short position matching data, the short position matching datarepresenting one or more short positions offered for matching withrespect to the outcome during the time T, where the one or more shortpositions vary with the odds S over the time T; long position matchingdata, the long position matching data representing one or more longpositions offered for matching with respect to the outcome during thetime T, where the one or more long positions vary with the odds S overthe time T; dynamically display in a graphical user interface on thedisplay unit during the time T a grid comprising a plurality oflocations for receiving user commands via the graphical user interface,the plurality of locations comprising: a short position section, theshort position section comprising one or more locations that dynamicallydisplay information regarding at least one of the one or more shortpositions, as the one or more short positions vary with the odds S overthe time T; and a long position section, the long position sectioncomprising one or more locations that dynamically display informationregarding at least one of the one or more long positions, as the one ormore long positions vary with the odds S over the time T; obtain aselection of a particular location of the grid, the selection beingobtained via a single action of the user input device at a particulartime within the time T; in response to another single action of the userinput device, in a particular location of the graphical user interface,communicate the selection to the server to be registered by the serveras a new options contract that comprises the odds S of the long or shortposition displayed in the particular location of the grid at theparticular time.
 15. The system of claim 14, wherein: the optionscontract comprises a call option, calculating the buyer payoff includescalculating (F/S−1), and calculating the seller payoff includescalculating (1−F/S).
 16. The system of claim 15, wherein the buyerpayoff includes max(F/S−1, 0)−P and the seller payoff includes min(1−F/S, O)+P.
 17. The system of claim 14, wherein: the options contractcomprises a put option, calculating the buyer payoff includescalculating (1−F/S), and calculating the seller payoff includescalculating (F/S−1).
 18. The system of claim 14, wherein determining Sfrom the exogenous market comprises determining a median of a latestpercentage of volume on a reference market.
 19. The system of claim 14,wherein determining S from the exogenous market comprises determining atrimmed mean of the latest percentage of volume on a reference market.20. The system of claim 14, further comprising a futures trade databaseconfigured to store the registered options contract and settlement datacomprising at least a unique identifier for the buyer and a uniqueidentifier for the seller.
 21. A method for processing trades inodds-based markets using a graphical user interface of a computingdevice in communication with a server system that maintains at least oneodds-based exogenous reference market, the method comprising: receivingfrom the server system: exogenous index odds, wherein the exogenousindex odds comprise adjusted gross odds for one or more possibleoutcomes in a given sporting event offered by an online exogenous oddsmarket, the sum of the inverse of the adjusted gross odds for allpossible outcomes being about 1, wherein the odds for the one or morepossible outcomes vary over a predetermined time bounded by an expirythat is prior to the respective outcome; short position matching data,the short position matching data representing one or more shortpositions offered for matching with respect to the one or more possibleoutcomes during the predetermined time, where the one or more shortpositions vary over the predetermined time; long position matching data,the long position matching data representing one or more long positionsoffered for matching with respect to the one or more possible outcomesduring the predetermined time, where the one or more long positions varyover the predetermined time; dynamically displaying in the graphicaluser interface during the predetermined time a grid comprising aplurality of locations for receiving user commands via the graphicaluser interface, the grid comprising: a short position section, the shortposition section comprising one or more locations that dynamicallydisplay information regarding at least one of the one or more shortpositions, as the one or more short positions vary over thepredetermined time; and a long position section, the long positionsection comprising one or more locations that dynamically displayinformation regarding at least one of the one or more long positions, asthe one or more long positions vary over the predetermined time; obtaina selection of a particular location of the grid, the selection beingobtained via a single action of a user input device at a particular timeprior to the expiry; in response to another single action of the userinput device, in a particular location of the graphical user interface,communicate the selection to the server system to be processed at theserver system as a new trade that comprises the long or short positiondisplayed in the particular location of the grid at the particular time,wherein a settlement value of the new trade is determined prior to theoutcome of the sporting event.
 22. The method of claim 21, wherein: theinformation regarding at least one of the one or more short positionscomprises at least the short odds offered for matching by a tradecounter-party; and the information regarding at least one of the one ormore long positions comprises at least the long odds offered formatching by a trade counter-party.
 23. The method of claim 21, whereinthe grid further comprises an event section, the event sectioncomprising one or more locations that display information regarding therespective outcome.
 24. The method of claim 21, wherein the grid furthercomprises an expiry section, the expiry section comprising one or morelocations that display information regarding the expiry of therespective outcome.
 25. The device of claim 24, wherein the informationregarding the expiry of the respective outcome comprises a runningcountdown to the expiry of the trading time allowed for the respectiveoutcome.
 26. The method of claim 21, further comprising: receiving fromthe server system information regarding one or more active tradespreviously processed by the server as new trades, the informationcomprising at least the settlement value; and displaying theinformation.
 27. The method of claim 26, wherein the grid furthercomprises: a trades section, the trades section comprising one or morelocations that dynamically display information regarding one or moreactive trades previously processed by the server as new trades; and adivestment input; and the method further comprises: obtaining aselection from a user comprising one or more of the active tradesdisplayed in the trades section of the grid, the selection beingobtained via a single action of the user input device at a particulartime prior to the expiry; and in response to another single action ofthe user input device selecting the divestment input, communicatinginformation regarding the selected one or more active trades to theserver to be registered by the server as a new offer to sell theselected one or more active trades.
 28. The method of claim 21, whereinthe new trade further comprises an investment amount.